Measure Sales Team Success With These Metrics

As a sales manager, what metrics do you look at when analyzing the performance of your team? Of course, many managers choose to look at total sales, but this metric does not tell the whole story. Here are metrics that every sales manager should look at to evaluate his team:

Revenue per customer.

Sometimes, looking at revenue generated per customer is a better indicator of a salesperson’s effectiveness than looking at revenue alone. Depending on the industry that you’re in, having fewer customers who spend more may be better for business than having dozens of customers who don’t spend much at all. The more customers you have, the more time you have to spend servicing them, so some companies may prefer their sales teams to focus on quality over quantity.

Cost of sales to revenue ratio.

No matter how much revenue your sales team is bringing in, if they’re not doing it efficiently, it doesn’t matter. That’s why it’s important for sales managers to review the cost of sales to revenue ratio on a regular basis. This metric will tell you how much you have to invest in your sales team, including salaries, commissions and client expenses, to bring in business. Sales managers should look for ways to sell more efficiently by reducing the costs associated with selling.

Customer retention ratio.

Once a salesperson has made a sale, his job is far from over. Sales managers should pay close attention to the customer retention ratio to determine whether salespeople are satisfying customers after the sale. For example, if a team of beauty supply distributors lands a contract with a huge retailer, but then the retailer chooses not to resign after the contract has expired, that team may not have done a great job satisfying the customer. Your focus shouldn’t always be on finding new customers since it’s much easier to retain and grow the ones you have, so this is a very important metric.

Marketing collateral usage.

One metric that goes unnoticed in many sales teams is whether or not they are using the marketing collateral provided to them. Why does this matter? Marketing collateral is made for a reason: to expertly inform and persuade potential customers. If the sales team is not using these materials, then they’re not presenting the right image to potential customers. Another reason why sales teams need to be evaluated based on whether or not they’re using the materials is because of the associated costs. Companies shell out thousands of dollars to have marketing content produced, so if the sales team isn’t using it, then this investment was a waste.

Lead response time.

The faster that a salesperson responds to a lead, the more likely that person is to convert. In fact, research has shown that companies that respond to initial queries within an hour are seven times more likely to qualify the lead. For example, if a marketing manager who represents a new product contacts your food distributors hoping to sign with them, your team needs to respond to that lead before other brands get the opportunity to do so.

What metrics do you use to measure your sales team success? Share your thoughts in the comments below!